On the Distributional Effects of International Tariffs

Daniel Carroll and Sewon Hur
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Sewon Hur: https://www.dallasfed.org/research/economists/hur.aspx

No 413, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: We provide a quantitative analysis of the distributional effects of the 2018 increase in tariffs by the U.S. and its major trading partners. We build a trade model with incomplete asset markets and households that are heterogeneous in their age, income, wealth and labor skill. When tariff revenues are used to reduce distortionary taxes on consumption, labor and capital income, the average welfare loss from the trade war is equivalent to a permanent 0.1 percent reduction in consumption. Much larger welfare losses are concentrated among retirees and low-wealth households, while only wealthy households experience a welfare gain.

Keywords: tariffs; inequality; consumption; welfare; taxation (search for similar items in EconPapers)
JEL-codes: E21 F10 F62 H21 (search for similar items in EconPapers)
Pages: 61
Date: 2022-01-29, Revised 2023-03-29
New Economics Papers: this item is included in nep-dge, nep-his, nep-int, nep-mac and nep-pub
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: ON THE DISTRIBUTIONAL EFFECTS OF INTERNATIONAL TARIFFS (2023)
Working Paper: On the Distributional Effects of International Tariffs (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:93663

DOI: 10.24149/gwp413r1

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